Good morning,
At the moment, markets appear to be in a better mood. Oil and the U.S. dollar are falling, while stock futures and bonds are moving higher in early trading. The shift seems tied to renewed hopes that diplomatic talks may resume.
This week has been somewhat surprising.
With the Strait still closed and, until roughly an hour ago, no visible path toward renewed negotiations, oil has understandably moved higher. U.S. equities, however, have been more resilient — mixed overall, as solid growth data has helped offset lingering inflation concerns.
The bigger surprise has been the sharp rally in technology shares, led by the semiconductor sector, which continues to rip higher. Less surprising has been the weakness overseas, with developed international markets bearing the brunt of higher energy exposure (EAFE -2.3% week-to-date).
For now, U.S. markets appear willing to look through the war.
Historically, geopolitical crises often trigger an immediate negative reaction as nervous investors rush for the exits. That initial volatility frequently clears weaker hands from the market — and has often been followed by surprisingly strong recoveries once uncertainty begins to stabilize.
Have a nice weekend. See you Monday morning.
Be well,
Mike